Company in liquidation - thoughts?

[BenJacobs]

I've reached out to an insolvency practitioner about a company that's in liquidation. I've just become aware of it, though they've been trying to sell it for many months - with no one coming forward to purchase it. I'm interested in taking over the trading name, as it's a very, very old business with a lot of heritage. I've spoken with the practitioner, and they've asked me to put forward my best offer for the trading name - and that I'll be responsible for the legal fees for myself and the seller. Some questions...

(1) Is it normal for a buyer to be responsible for the sellers fees and legals as well? This could easily account to more than the purchase of the trading name itself
(2) Is it their responsibility to get as much money for the assets as they can, so if they've not had anything offered so far, I could theoretically offer £100 for the trading name, which is more than they've received so far for it, and could they decline this, or would they have to accept as it's money being offered?
(3) If I didn't purchase the trading name from them, and it does go through the process and is dissolved, could I then not just start a company up with that trading name, for free, without having to purchase it?

Thank you

 

[DontAsk]

Is the name also trademarked? If so, who owns it? It could complicate reusing the name.

 

[Scalloway]

(1) Is it normal for a buyer to be responsible for the sellers fees and legals as well? This could easily account to more than the purchase of the trading name itself

I think you've answered your own question. The liquidator doesn't want to be out of pocket.

 

[BenJacobs]

Is the name also trademarked? If so, who owns it? It could complicate reusing the name.

Good question, appears it has been trademarked, yes. The owner is somebody I haven't heard of, but Google has them as a trademark attorney, so guess he has been instructed by the liquidator to protect the brand in some way?

 

[BenJacobs]

I think you've answered your own question. The liquidator doesn't want to be out of pocket.

Neither do I

 

[MOIC]

Neither do I

Why would you be out of pocket?

Just factor in potential costs and if that’s viable, then buy it. If it’s more that what it’s worth to you, then leave it.

You’ll know (approximately) the costs involved before making your offer.

Sounds like a good name to have, given it’s history.

 

[Newchodge]

Neither do I

If the sellers' costs are more than you would pay for the name the liquidator won't sell it because, rather than making money from the sale they will be losing money. So what is the point?

 

[Socio South West]

As I understand an IPs role it is to protect what remains of the company on behalf of the creditors

He is thus going to bat hard for the best deal he can as long as its positive on his side of the fence, and if it isn't positive he's not going to do a deal. Keep talking to him and put some numbers on the table is my suggestion.

It's a position where everything is up for negotiation, and you have to assess the long term value of acquiring the trading name - but bearing in mind that the acquisition and use of it may bring a few skeletons in terms of the recent history.

Interesting situation - best of luck.

 

[IanSuth]

An old school friend of mine's job is to hunt out heritage names that may harbour some goodwill but are languishing in positions like this and then buy and sell them at a profit.

As he is not alone, the fact this company has sat there and nobody like him has snapped it up might mean it has value to you that it does not have in a wider context and you can get a good deal

 

[Lisa Thomas]

No
Yes
Yes

 

[BenJacobs]

Why would you be out of pocket?

Just factor in potential costs and if that’s viable, then buy it. If it’s more that what it’s worth to you, then leave it.

You’ll know (approximately) the costs involved before making your offer.

Sounds like a good name to have, given it’s history.

Because the company won't be generating any profit so any money put into it is my up-front expense, putting me out of pocket. It's not purchasing a money-making venture. I've requested what they believe to be their 'reasonable fee' for whatever work they're assuming they'll be doing - however as it's just the trading name, it could easily be that double legal expenses would outweigh the benefit of having the name anyway, hence I suppose why it's not been purchase in the 6 months or so it's been marketed.

 

[BenJacobs]

As I understand an IPs role it is to protect what remains of the company on behalf of the creditors

He is thus going to bat hard for the best deal he can as long as its positive on his side of the fence, and if it isn't positive he's not going to do a deal. Keep talking to him and put some numbers on the table is my suggestion.

It's a position where everything is up for negotiation, and you have to assess the long term value of acquiring the trading name - but bearing in mind that the acquisition and use of it may bring a few skeletons in terms of the recent history.

Interesting situation - best of luck.

You raise some great points here, thank you.

Having not dealt with this from an insolvency perspective before, and never tried to purchase something that doesn't make money or have a business attached to it, it is an interesting situation, and one where I'm really unsure on what the offer should be just for the trading name. I know I definitely have to factor in legal expenses apparently from both sides, but that could easily be £4,000 - £5,000 I'm guessing, which actually would be more than I'd want to offer for the name anyway - though it'd be a great name to have with the history it's got. I definitely have to bear in mind though that it'll likely come with some skeletons like you say, who will almost certainly want a conversation after it's purchase.

 

[BenJacobs]

An old school friend of mine's job is to hunt out heritage names that may harbour some goodwill but are languishing in positions like this and then buy and sell them at a profit.

As he is not alone, the fact this company has sat there and nobody like him has snapped it up might mean it has value to you that it does not have in a wider context and you can get a good deal

Nice input and feedback, and interesting points, thank you. I am actually surprised that it hasn't been purchased yet. The IP did say it had been advertised for sale for a number of months (must have been at least 6 months as it was put into liquidation before that) and that no one has come forward to put an offer in. I don't know exactly how long it'll be in liquidation for before they just close it and say that there was nothing else to sell from it, do you know?

 

[BenJacobs]

No
Yes
Yes

Thank you, good to see from the perspective of an IP. I've sent you a private message. Thanks again.